Record keepers are working diligently to make sure their plan sponsor clients comply with a still not-yet-final rule from the Department of Labor requiring them to provide estimates of the monthly income participants can expect from their retirement accounts once they retire.
But one of the biggest open questions is whether the DOL will reverse itself regarding the assumption that the accounts post no future earnings growth, an assumption that some industry stakeholders have challenged.
"If the final rule is significantly different from the interim rule, we'll have to make changes to how we calculate and present the disclosure," said Shankar Saravanan, a Boston-based senior vice president of customer core experiences at Fidelity Investments. "Our hope, if that is the case, is that the DOL would provide a good-faith transition period so that the fiduciaries would still get the safe harbor."
As detailed in the agency's interim final rule published Sept. 18, 2020, plan sponsors will have to provide participants with two illustrations showing what their account balances could provide in guaranteed monthly income if converted to an annuity. One illustration would convert the account balance into a single life annuity and the other into a joint and survivor annuity.